Angry Birds is a great example. I would gladly pay the piddly .99c they ask on iOS, if given the choice! The iOS version is paid only and ad free, while the Android version is free only, with intrusive ads.
The issue is the market. From what I've seen and read, Android owners are less likely to pay for apps, so devs have to resort to advertising to get their revenues.
That's the perception, and I presume that's why Rovio is taking this tactic. Is it true, though, for them? My impression is that they're testing the advertising method. If anyone could sell a ton of Android apps, they could.
Pretty much any Android phone owner interesting in downloading Angry Birds would be willing to pay .99c for it. It's a shame they won't treat Android like iOS in this respect - a must-have app is exactly what the Android Market needs. Get people into the Market with a serious intent to obtain a specific app, and they'll set up their account and payment method, paving the way for future purchases.
Rovio could be priming the marketplace in general and giving it a big boost. Instead, they're giving Android users a 2nd rate user experience, as well as contributing to the perception that you can't sell apps on Android.
They don't have to resort to advertising so much as choosing the advertising model because it yields more revenue. At least for the specific case of Angry Birds.
The issue is the Android platform. The Android market is very difficult to sell apps on because the "open" Android platform makes it ridiculously easy to pirate apps.
